Month: January 2025

Shares of Aeroflex Industries locked in upper circuit of 20 per cent at Rs 223.20 on the BSE in Thursday’s intra-day trade amid heavy volumes after reporting a strong set of numbers for the quarter ended December 2024 (Q3FY25). 

The average trading volumes on the counter jumped over seven-fold, with a combined 8.52 million equity shares, representing 6.6 per cent of the total equity of Aeroflex changing hands on the NSE and BSE till 12:05 PM. Moreover, there are pending buy orders for 650,000 shares on the exchanges, data showed. The stock had hit a record high of Rs 235 on December 12, 2024.

Investor Ashish Kacholia held 2.38 million, or a 1.84 per cent stake, in Aeroflex at the end of December quarter, the shareholding pattern data showed. 

Aeroflex is engaged in the business of manufacturing and supply of metallic flexible flow solutions made with stainless steel. The product range includes stainless steel corrugation products (braided and non-braided) such as hose, double interlock flexible metal hoses, composite hose, stainless steel hose assemblies, teflon/PTFE hose, and fittings, among other items. The company has established itself as a leading global provider of metallic flexible flow solutions, catering to diverse industrial sectors worldwide. 

In Q3FY25, Aeroflex reported a 68 per cent year-on-year (YoY) jump in consolidated profit after tax at Rs 15.21 crore, on the back of a 35 per cent YoY jump in total income, at Rs 100.37 crore. The company’s earnings before interest, tax, depreciation and amortisation (Ebitda) grew at a healthy 48 per cent YoY to Rs 22.70 crore, with a strong Ebitda margin of 22.8 per cent, an improvement of 199 bps.

The management said the strong growth was driven by a strategic shift towards the company’s assembly business, increased domestic projectbased sales, and sustained market demand. Looking ahead, the management plans to further expand capacity for value-added offerings, which are expected to enhance the company’s Ebitda margins and strengthen its market position. 

“To support these initiatives and explore growth opportunities, the company is evaluating fund raising options to drive both organic and inorganic expansion, reinforcing our commitment to sustainable progress and stakeholder value creation,” the management said. 

Looking ahead, Aeroflex is poised for a promising future, driven by its strategic focus on expanding its product portfolio, enhancing its global presence, and leveraging advanced manufacturing capabilities, the management added. The company said it is committed to capitalising on the emerging opportunities across diverse industrial segments, including aerospace, oil and gas, solar, robotics, semiconductors and electric vehicles. Aeroflex’s ongoing investments in digitisation and Industry 4.0 initiatives are set to drive operational efficiencies, ensuring the company remains at the forefront of innovation and excellence, they added.

Meanwhile, Aeroflex, which generates approximately 84 per cent of its revenues from international markets, is well positioned to benefit significantly from a healthy global demand of flexible flow solutions, given that it is an integral part of key industries (like steel & metals, oil & gas, chemicals, port terminal handling, paper, pharma, and residential & commercial real estate, among others). Moreover, the company is expanding its presence to new-age sectors like fire sprinklers, solar, robotics, semiconductors, aerospace & satellite and electric mobility, as well. 

With Aeroflex expanding capacity across existing segments and venturing into new product segment (metal bellows), it remains focused on improving profitability through increasing the overall share of better-margin products, analysts at ICICI Securities said in a recent company note.

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Tyre manufacturer CEAT share price plunged as much as 7.11 per cent to hit an intraday low of Rs 2,840 apiece on Thursday, January 16, 2025.  

The fall in the CEAT share price came after the company posted a weak set of December quarter (Q3FY25) results.  

CEAT’s consolidated net profit (Bottomline) plunged 46.5 per cent year-on-year (Y-o-Y) to Rs 97.1 crore in the December quarter of financial year 2025 (Q3FY25), from Rs 181.5 crore in the December quarter of financial year 2024 (Q3FY24). 

The tyre maker’s topline, also known as revenue from operations, however, surged 11.4 per cent annually to Rs 3,299.9 crore in Q3FY25, from Rs 2,963.1 crore in Q3FY24. 

At the operating front, earnings before interest, tax, depreciation and amortisation (Ebitda) plummeted 18.4 per cent Y-o-Y to Rs 340.9 crore in Q3FY25, from Rs 417.6 crore in Q3FY24. 

Consequently, Ebitda margin squeezed 380 basis points (bps) Y-o-Y to 10.3 per cent in Q3FY25, from 14.1 per cent in Q3FY24.  

On the Q3 results, Arnab Banerjee, MD & CEO, CEAT, said, “We witnessed a strong year-on-year double digit growth, driven by the replacement segment. While the rising raw material costs have impacted our margins, we progressively passed on part of the increase through price increase in select categories during the quarter. The demand continues to remain stable, and our order book pipeline is robust across all segments. Raw material prices look flattish in Q4 and we expect growth momentum to continue.”

What do analysts say? 

ICICI Securities analysts noted that CEAT has guided for a continued inflationary trend in the raw material basket, though at a reduced rate of 1.5 per cent to 2 per cent in Q3 compared to Q2. This would provide room for the company to enhance margins through calibrated price hikes, leading to the expected quarter-over-quarter margin decline.  

The company anticipates the raw material basket to remain flat in Q4FY24, with growth momentum expected to persist. A key point to watch is the commentary from other players regarding the bottoming out of the raw material basket in Q3FY25. The company’s topline growth was encouraging, driven by strong performance in replacement and export markets, alongside a recovery in the OEM segment.

On the other hand, Motilal Oswal, while maintaining a ‘Buy’ rating and a target price of Rs 3,058, reported that CEAT’s net sales grew by 8 per cent Y-o-Y to Rs 3,300 crore, in line with expectations. This was primarily driven by strong volume growth in both replacement and export segments.  

The company saw an 11 per cent Y-o-Y increase in revenue to Rs 3,300 crore, benefiting from improved realisations on both Y-o-Y and Q-o-Q bases. However, the gross margin contracted by approximately 450 basis points Y-o-Y and 60 basis points Q-o-Q to 36.8 per cent, mainly due to rising raw material costs. 

Consequently, Ebitda declined 18 per cent Y-o-Y to Rs 340 crore, also in line with expectations, with Ebitda margins contracting by 380 basis points Y-o-Y and 60 basis points Q-o-Q to 10.3 per cent. Adjusted PAT came in lower than expected at Rs 86.3 crore, marking a 53 per cent Y-o-Y decline, primarily due to higher-than-anticipated interest costs and taxes. 

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Shares of aerospace and defence company Zen Technologies fell 11.32 per cent to Rs 2,180 in trade on Monday, January 13, on the National Stock Exchange (NSE) amid a broader stock market crash. Meanwhile, the company, in an exchange filing, announced that its board of directors has approved an investment of up $10 million in its wholly owned subsidiary, Zen Technologies USA, Inc, in one or more tranches. 

Zen Technologies USA, incorporated on March 9, 2018, focuses on the design and development of combat training simulators and systems for military and security forces. Its product offerings include live-fire, virtual, and constructive training solutions, with a special emphasis on counter-drone technology. The company said that the investment aims to leverage new growth opportunities in the US market.

Zen Technologies is engaged in designing, developing, and manufacturing state-of-the-art simulators. The company primarily caters to training simulators for police forces, anti-drone systems, and paramilitary and armed forces, along with government departments in sectors such as transport, mining, and infrastructure, as well as the civilian market. 

As of January 13, 2025, the company has a market capitalisation of Rs 19,862.07 crore on the NSE. The defence company’s shares have a 52-week range of Rs 2,627 to Rs 688.05 on the NSE. 

Zen Technologies shares have delivered a 57 per cent return in the past six months, and a whopping 180 per cent return in the last one year.

At around 2:27 PM on Monday, the shares were quoted at Rs 2,185.20, down 11.11 per cent from their previous close of Rs 2,458.45 on the NSE. Nearly 0.67 million equity shares of Zen Technologies had traded on the BSE and NSE, amounting to an estimated turnover of Rs 154 crore as of the time of writing. 

Meanwhile, benchmark equity indices were trading lower on Monday. The NSE Nifty50 was quoted at 23,107.25, down 1.38 per cent, while the 30-share Sensex was lower by 953 points, trading at 76,425.03.

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With the markets in a downtrend several stocks have logged back-to-back losses in the recent trading sessions. Data from NSE futures & options market shows, that 33 out of the 223 stocks in the derivatives segment logged a net loss in the last four trading sessions; with a majority of them i.e. 30 out of these 33 stocks seeing an over 10 per cent increase in open interest (OI). 

In general, a dip in price accompanied with a corresponding increase in open position (interest) is considered as build-up of short position at the particular contract. 

Meanwhile, the NSE Nifty 50 index had ended last week with a loss of 2.4 per cent at 23,432. The Nifty January futures were down 0.6 per cent on Friday while the OI also dipped by 0.7 per cent. However, over the last four trading sessions the Nifty January contract has seen near 9 per cent increase in OI amid the declining trend. 

NSE data shows that Tata Exlsi has seen a huge 63.5 per cent increase in OI, while the stock dipped by 8 per cent. On Friday along the stock was down 7 per cent on the back of 33.5 per cent rise in OI.

Among others, in the last four trading sessions, CESC has shed 7.2 per cent while the OI jumped by 44.3 per cent. Paytm tumbled 12.5 per cent amid a near 40 per cent surge in OI. Kalyan Jewellers has cracked 16.5 per cent while the OI rose over 35 per cent.

Similarly, Angel One and JSW Energy too witnessed an over 27 per cent increase in open positions, while the respective stocks logged an 8.2 per cent and 10.2 per cent fall. 

Category-wise bets on Nifty / Index futures 

Data shows that retail investors are most bullish at current juncture, with the long-short ratio in index futures at a seven-month high. An analysis of F&O data reveals that retail investors index futures long-short ratio now stands at 2.53 – implying 5 open positions on the long (bullish) side of trade as against 2 short (bearish) bets. 

Retail investors were this bullish last on June 04, 2024, the day of Lok Sabha Elections results, with a long-short ratio at 2.45. 

On the other hand, foreign institutional investors (FIIs) continue to hold heavy short positions with index futures long-short ratio at 0.19. This ratio implies that FIIs hold 5 short positions for every long trade in index futures. 

Data shows that FIIs OI in Nifty futures alone has increased by 20 per cent in the last four trading sessions; while the total OI in index futures has increased by 16.9 per cent in the same period. FIIs OI in Bank Nifty and   MidCap Nifty futures has risen by 16 per cent and 8.8 per cent, respectively. Thus suggesting an overall negative bias on the Indian stock market for now. 

Analysis of the Nifty options data too suggests softening sentiment, with aggressive call writing and reduced put interest. 

“Aggressive call writing in the 23,500 – 24,000 range signalled diminishing buying interest while unwinding put positions underscored mounting bearish sentiment. The Put-Call Ratio (PCR) edged up from 0.65 to 0.73, reinforcing a prevailing bearish tone. The max pain point stands at 23,700.” said Dhupesh Dhameja, Derivatives Analyst at  SAMCO Securities.

A sustained dip below 23,270 would expose the Nifty to further declines toward 23,000. The broader trend remains bearish, favoring a “sell-on-rise” strategy as buyers struggle to sustain gains at elevated levels, Dhupesh added.

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India stock markets today crashed 1 per cent in intraday trade on Monday, January 13, 2025, leaving investors looking for cover. The BSE Sensex index today tumbled 1,128 points or 1.4 per cent to hit a low of 76,250. The NSE Nifty50, on the other hand, shed 357.5 points or 1.5 per cent to touch a low of 23,047. The BSE MidCap and SmallCap indices, on the other hand, bled over 4 per cent each in the intraday trade. 

While the benchmarks have dropped 1 per cent in the first seven sessions of January, they are down up to 11 per cent (Sensex 10 per cent, Nifty 10.8 per cent) from their record high levels hit in September 2024.

Analysts attribute the ongoing correction in the stock markets to a confluence of factors, including profit booking by foreign investors, weak capex by the Central government during the first half of the current financial year (H1FY25), tepid consumer demand triggered by prolonged rains and sharp spike in food inflation, and US President-elect Donald Trump returning to the White House with his protectionist policies. 

Besides, fears of a shallow rate cut cycle by the Reserve Bank of India (RBI), amid sticky inflation (back home) and likely inflationary policies by Trump (globally), has added to the currency volatility amid rising yields.

Going ahead, analysts see a slow pace of recovery for the India stock markets, with Trump’s Presidency and the Union Budget 2025, back home, holding the key to the recovery in investors’ portfolio.

When will Indian stock markets recover from ongoing correction? What should investors do now? Stock market prediction:

Prabhudas Lilladher Institutional Equities:

With food inflation having peaked out at 10.9 per cent in October 2024, and the Government trying to accelerate capex spending, we expect gradual economic recovery to set in. We are already witnessing an uptick in ordering momentum in Railways, Defence, Power, Data centers etc, the execution of which will accelerate growth in FY26 and beyond.

We believe the upcoming budget 2025 and Trump 2.0 hold key to market returns. 

We expect markets to remain volatile in the near-term but stabilise towards the end of Q4FY25. We would recommend selective buying in current turbulent times for long-term gains given reasonable valuations as long-term India growth story remains intact. 

We are turning IT services to overweight and auto to equal weight. We are increasing weights in Capital goods, Healthcare, IT services, and Oil and Gas (RIL). Among stocks, we are removing Hero Moto, Avenue Supermart, and Nestle from model portfolio. We are increasing the allocation for L&T, Siemens, HDFC Bank, Maruti, Britannia, HUL, ITC, Max Healthcare, Infosys, and Reliance Industries.

Emkay Global Financial Services:

The markets should remain weak during Q1CY25, but we expect stability from Q2CY25, with earnings outlook improving and the FPI selling abating by then. We see the Dollar Index rally petering out after the Trump inauguration, as we see minimal risk of a full-blown trade war. 

Moreover, India’s earnings downgrade cycle should be done by then, and the froth in valuations has also subsided. We don’t see aggressive FPI buying returning, though. 

That said, Q1CY25 could see extreme volatility and spells of intense selling until the dust settles around the geopolitical uncertainties.

As a strategy, we go contrarian and downgrade Technology to ‘Neutral’ on valuations and upgrade Consumer Discretionary to ‘Overweight’ on the expected turnaround. Staples and Financials are our ‘Underweight’ sectors. We are also ‘Overweight’ on Healthcare and Real Estate. 

Top stock ideas for CY-2025: We like Lupin, Zomato, and Tata Motors among large-caps; IndusInd Bank, Escorts, and One97 Communications in mind-caps; and StoveKraft, Metropolis Healthcare, and Quess Corp in small-cap stocks. 

Kotak Institutional Equities:

The recent sharp correction in the Indian market and stocks across caps does not change our cautious outlook for the market, given full-to-frothy valuations in most parts of the market, low scope for earnings upgrades, and an uncertain global macro-environment and likely higher-for-longer bond yields and interest rates.

In our view, large-cap stocks may hold up better in the next few months while mid-cap, small-cap, and ‘narrative’ stocks will see further severe correction if the alignment to fundamentals and value were to continue. FPIs are unlikely to look at India favorably in a hurry, and retail investors would increasingly contend with dwindling trailing returns. 

Yashovardhan Khemka, senior manager – research and analytics at Abans Holdings:

We anticipate a further market correction of 4-6 per cent before the recovery begins. A clearer understanding of Trump’s policies, likely one-two weeks after his inauguration, could help stabilise market sentiment. Investors are advised to adopt a cautious “wait-and-watch”.

Manish Chowdhury, head of research, StoxBox:

Our sense is that downside risks from the current levels looks limited and it would be prudent to build positions in high-quality stocks where valuations are reasonably comfortable from a medium to long term perspective. The upcoming Union budget and the RBI monetary policy meeting in February have the potential to surprise market participants on the upside, by unveiling measures to catalyse growth in the Indian economy.

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